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Evaluating the Management of U.S. Strategic Petroleum Reserve during Oil disruptions
School of Business, Nanjing Normal University, Nanjing, China.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences. Mineral and Energy Economics Program and Payne Institute of Earth Resources, Division of Economics and Business, Colorado School of Mines, United States.
2018 (English)In: Energy Policy, ISSN 0301-4215, E-ISSN 1873-6777, Vol. 117, p. 25-38Article in journal (Refereed) Published
Abstract [en]

Numerous countries have set up strategic petroleum reserves (SPRs) in response to oil disruptions since 1970. While numerous studies model such programs, we found few that evaluate SPRs' historical performance. Thus, we evaluate the U.S. SPR's performance by comparing actual real costs with estimated real benefits. From 1976 to 2014, the real U.S. SPR cost was about $219 billion real (2014$) dollars, whereas the real benefit was only $122 billion. Sensitivity testing suggests such negative net benefits are qualitatively robust. However, if world oil demand is extremely inelastic to oil price or GDP is elastic enough to oil price shocks, the estimated U.S. SPR net benefit is positive. Sensitivity testing around total real costs and benefits range from $380 billion to $80 billion. Limited testing of IEA coordinated drawdowns suggests that total U.S. benefits jump from $122 billion to more than $400 billion putting the SPR strongly in the black. Limited testing of private sector inventory changes was more disappointing and tentatively suggests private activities may at times have offset some of the government drawdowns. With 20-20 hindsight, initial experimentation found that better management could have significantly enhanced the value of the U.S. SPR, especially for the 1990-91 disruption.

Place, publisher, year, edition, pages
Elsevier, 2018. Vol. 117, p. 25-38
Keywords [en]
Oil disruption, Strategic Petroleum Reserve (SPR), Cost benefit analysis, United States
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-67837DOI: 10.1016/j.enpol.2018.02.034ISI: 000431932600003Scopus ID: 2-s2.0-85042326359OAI: oai:DiVA.org:ltu-67837DiVA, id: diva2:1187543
Note

Validerad;2018;Nivå 2;2018-03-13 (rokbeg)

Available from: 2018-03-05 Created: 2018-03-05 Last updated: 2018-06-21Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
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Output format
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